Rotary Tools cola power tools and backs och product it Dolls with a one-year war

Question

Rotary Tools cola power tools and backs och product it Dolls with a one-year warranty against datots. Based on previous experience, the company expects warranty coats to be approximately 6% of sales. By the end of the first year, aos are $750,000. Actual warranty expenses incurred so far aro S11,000. 1. Does this situation representa contingent liability? 2. Record warranty expense and warranty liability for the year based on 8% of sales. (If no entry is required for a transaction/event, select "No journal entry required in the first account field.) View transaction list Journal entry worksheet Record warranty expense and warranty liability for the year based on 6% of sales. Note: Enter debits before credits. Event General Journal Record entry Clear entry Vier general journal 3. Record the actual warranty expenditures of $11,000 inoured so far. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet Record the actuel warranty expenditures of $11,000 incurred so far. Note: Enter debits before credits Event | General Journal Record entry Clear entry Vier general journal 4. What is the balance in the Vietranty Listility account after the entries in perts 2 and 3?

Explanation / Answer

1 No, it is not a contingent liability 2 Warranty Expense 45000 =750000*6%          Warranty Liability 45000 Warranty Liability 11000          Cash 11000

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